Shah Fahad
ONCE a strong economic power among
other Latin American countries, Ven
ezuela has now slipped into a deep state of crisis. The country is facing a worse economic, humanitarian, political, and health crises. For two decades, popular Hugo Chavez ruled the country with a socialist approach. Due to corruption and wrong economic decisions the conditions worsened, the government had no other option but to repatriate some of the gold they have with Bank of England to raise cash.
It is estimated that Venezuela has the largest oil reserves in the world, larger than Saudi Arabia. When socialist leader Hugo Chavez took command of the country, he promised welfare and redistribution of wealth among the compatriots. During his regime, he improved the lifestyle of the people, and the country enjoyed prosperity. Venezuela was among the founding members of OPEC and was largely dependent on oil exports. During the Chavez’s regime, the oil prices went up which helped fuel his social welfare programs. When the oil prices started to decline due to oil glut, the economy of Venezuela started to suffer, that’s what happens when you put all your eggs in one basket. After the death of the famous socialist leader in 2013, Nicolas Maduro who was his wingman came into power and by that time, the economic situation was very weak. Many social welfare programs were funded by taking loans because Chavez feared to lose his popularity by discontinuing those programs. During the prosperous times instead of creating other avenues to create revenue, the government miss utilized its resources.
Chavez committed economic blunders during his time and Maduro further exacerbated the economic woes by printing money to pay off the debts that resulted in hyperinflation. According to the Central Bank of Venezuela inflation spiked by a whopping 53.8 million percent during 2016 and 2019. According to Bloomberg the price of a cup of coffee in Venezuela has increased 9,900 per cent from 2019 to 2020. The country faces a shortage of gasoline with long ques on the gas stations. Low minimum wages, hyperinflation coupled with the shortage of food has forced five million people in exodus, creating a humanitarian crisis.
With worsening economic conditions, Maduro Administration became unpopular among the people, and to remain in power the elections of 2018 were rigged. After the elections, Juan Guaido who is an opposition leader appointed himself as the interim president and got recognition from 50 countries namely the US and UK. Practically Juan has little to no power at all in the country since Maduro has the support of the military, controls the judicial system and political ground. On the international front Maduro’s government has the support of other socialist countries like Russia, China and Cuba.
The US has strictly advised not to carry out any transaction with the Government of Venezuela. Since the UK does not accept Maduro as the rightful President, the Bank of England is not willing to act upon his government’s request of repatriation of 31 tonnes of gold bars or selling 930 million pound worth of gold. For transparency, the Venezuelan government signed a deal with the UN so that the proceeds from the gold can be directly credited to the UN’s account to fight covid-19 in the country. The Venezuelan government has filed a legal case against the Bank of England claiming their gold. After all those years of mistrust on government, economic blunders, hunger, weak healthcare, corruption, and extortion, the people of Venezuela don’t trust Maduro’s government with their money or gold let alone the Bank of England.
—The writer is a Karachi based freelance journalist.
